Will Tennessee House Republicans go along with retooled road funding plan?

Will Tennessee House Republicans go along with retooled road funding plan?

Senate panel lowers amount of Haslam gas tax proposal, cuts grocery tax by 20 percent

March 14th, 2017 by Andy Sher in Politics State

Tennessee Governor Bill Haslam talks about the commitment the state has to Volkswagen Wednesday outside the Tennessee Department of Transportation Management Center in Chattanooga. Tennessee General Assembly House Speaker Gerald McCormick listens, back right. The governor had just come from visiting with workers inside the plant Wednesday afternoon, Oct. 7, 2015.

Photo by Tim Barber /Times Free Press.

What changed

Senate revisions to Gov. Haslam’s road-funding bill:

* Reduces governor’s proposed gas tax increase from 7 cents per gallon to 6 cents. Phases increases in over 3 years with 4 cents in Fiscal Year 2018, 1 cent in FY 2019 and 1 cent in FY 2020.

* Reduces governor’s proposed diesel tax increase from 12 cents per gallon to 10 cents. Phases in over 3 years with 4 cents in FY 2018, 3 cents in FY 2019 and 3 cents in FY 2020

* Alternative fuel tax increase of 8 cents phased in over 3 years.

* Removes inflation indexing provision

* Removes 3 percent rental car surcharge

* Deepens Haslam’s proposed cut to state’s sales tax by reducing the 5 percent tax to 4 percent beginning July 1 as opposed to the 4.5 percent originally proposed by the governor.

* Veterans and elderly/disabled persons state-funded property tax relief: Increases eligible value on homes for veterans from $100,000 to $135,100. Increases values of homes for the elderly and disabled from $23,500 to $27,000 for elderly/disabled. Adjusts for inflation in future years.

Provisions remaining the same

* Maintains reduction of corporate taxes on manufacturers in Tennessee.

* Keeps vehicle registration fee increase

* Keeps $100 electric vehicle fee

* All fuel tax is allocated to the state’s Highway Fund

* Maintains a local government sales tax option.

NASHVILLE — The state Senate Transportation Committee on Monday approved a retooled version of Gov. Bill Haslam's proposed gas tax plan to fund transportation projects, but whether the new deal survives an upcoming road test in the House remains to be seen.

State Senate Majority Leader Mark Norris, R-Collierville, attends a floor session floor session in Nashville, Tenn., on Thursday, April 16, 2015. Norris opposed a bill seeking to make the holy Bible the official book of Tennessee. (AP Photo/Erik Schelzig)

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Photo by The Associated Press/Times Free Press.

Senate Majority Leader said the changes, which he negotiated with fellow Republican Haslam, guarantees most Tennesseans will save more money through various cuts in other taxes than they would pay in higher gas and diesel taxes.

Among other things, the agreement, approved by Transportation Committee members on a seven to one vote, reduces Haslam's proposed gas tax increase from 7 cents to 6 percents a gallon and the hike on diesel from 12 cents to 10 cents.

Those increases would be phased in over a three-year period. The new plan also eliminates a controversial provision that sought to peg future increases to inflation. And it drops yet another proposal to raise vehicle rental fees by 3 percentage points.

Norris and others are counting on Tennesseans liking a provision that increases the size of Haslam's proposed cut to the 5 percent grocery tax. Haslam recommended cutting it to 4.5 percent. But the bill now cuts it to 4 percent, worth about $120 million to consumers. And unlike the phased-in fuel increases, the percentage point cut to the sales tax on food would take effect July 1.

Norris said his goal was "to reduce taxes to rebuild the state so our folks would save more at the store than they pay at the pump."

But Haslam's proposed IMPROVE Act is still facing problems in the lower chamber.

House Assistant Majority Leader David Hawk, R-Greeneville, whose idea of avoiding a fuel tax increase by diverting a quarter percentage point of existing sales taxes, was skeptical, saying he had concerns.

"We've got the idea of transportation funding, which I think should stand alone, and we continue to bring other issues on board that continue to confuse the issue," Hawk said. "If we're going to deal with transportation funding, let's let the other issues stand on their own."

A number of House members, especially on the Transportation Committee, are opposed to any fuel tax increases. After the bill moved last month through a subcommittee without the gas tax increase, proponents were later unable to get it through the full Transportation Committee last week.

There could be problems trying to attach the Senate changes in the full committee today, given that it was not filed in time and would require two-thirds approval, Republicans said.

Norris said he began discussing with Haslam changes to the proposal in recent weeks, an effort which intensified last week.

One provision in the amended bill would boost the amount of state- funded property tax relief that service-connected disabled veterans as well as elderly, lower-income Tennesseans, receive on their homes.

Some veterans are currently eligible for some tax relief based on the first $100,000 of their home. The Senate bill boosts that to $135,100. For seniors, the value limit for low-income elderly would rise from $23,500 to $27,000.

Sen. Mark Green, R-Clarksville, a veteran who is running for the 2018 GOP gubernatorial nomination, has stand-alone legislation seeking to restore 2015 cuts on the veterans aid.

Green charged the amended gas tax bill's effort to address veterans is a "very thinly veiled manipulation to somebody to vote for something they don't want to vote for. Just don't tag it on your gas tax."

Norris, R-Collierville, who is seriously weighing a bid for governor, said earlier it was time to get the road proposals, aimed at an estimated $10.5 billion backlog, off center.

The leader said that while Haslam is talking up the benefits for business, he believes it's even more importantly a safety issue with a number of bridges, especially local bridges, across the state posted because they can't carry heavy traffic including fire trucks and ambulances.

"It's almost the Ides of March [March 15] and we need the direction about where our overall budget is going to go," Norris said. "The governor needs to know. I thought we should damn the torpedoes and move full speed ahead."

The revised bill retains several of Haslam's other provisions, including a reduction in corporate franchise and excise taxes for Tennessee-based manufacturers.

Haslam's other proposal to continue reducing the 6 percent Hall Income Tax on interest and divisions with a 1.5 percentage point cut was changed in the newly amended bill. It now drops the tax from 6 percent to 5 percent.

Lt. Gov. Randy McNally, R-Oak Ridge, however, called the amended bill a "strong, fiscally-responsible road funding plan."

The bill as amended, McNally said, "is now beyond revenue-neutral. It is a clear and undisputed tax cut for Tennesseans. It has my unequivocal support."

Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550. Follow him on Twitter @AndySher1.


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